MidMichigan Extends Tracks

January 20, 2006
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MUSKEGON — Mid-Michigan Railroad has extended the West Michigan Shore Railroad by 48 miles by leasing the Fremont-to-West-Olive branch line from CSX Corp.

Mid-Michigan Railroad is following the trend of short line railroad companies extending their lines through leasing branch lines from larger companies like CSX, which owns 22,000 miles of railroad. After leasing the Fremont-to-West-Olive line, CSX is no longer operating any of its lines west of Grand Rapids

Kim Freely, spokeswoman for CSX, said leasing branch lines to other companies is a good way to ensure customer service.

"We're just not always able to provide the one-on-one service that a small carrier can," she said. "Most of them, if not all of them, connect to our main line and transfer out of Michigan that way."

The wave of leasing that has been taking place is part of the company's "network rationalization," Freely said.

"We've just been reassessing our lines to see what lines are better served by short-line carriers," she said.

Short lines offer one-on-one customer services and allow more flexibility and specialty services than larger companies can provide, Freely said.

Freely said the reallocation strategy started in 2004 and is ongoing, and is taking place throughout the network.

"We have estimated to reallocate about 1,000 miles of track," she said. "It's the areas that we don't feel that we can provide as much service to, that we're not serving as we think we should.

"We want to allocate resources to areas (where) we feel we have more business operations," she said.

Mid-Michigan officials are pleased with the arrangement.

"When CSX decided to divest that property, for us, it was just a really good fit," said Susan Greenfield, vice president of investor relations and corporate communications for RailAmerica Inc., of which Mid-Michigan Railroad is a subsidiary. "It's just an extension and we were already moving freight in that area. It's additional revenue and additional traffic."

The products typically will still make their way to a CSX line, but be carried by a short line from the smaller towns. Greenfield said it can be a benefit for the smaller companies to take over because their employees live and work right in the community and can have better service and better relationships with local customers.

"They can devote their time to their main-line track," she said of CSX.

It can also benefit the short lines because it allows them to acquire more miles, but they do not have to expend capital as they would when buying a track.

"To the customer, there's really not a difference," Freely said. "It's just that they're working with the short line vs. working with CSX. For the most part it's a pretty seamless transition for the customers."

Mid-Michigan Railroad General Manager Jack Bixby said the transition has not been difficult.

"We blended that operation that CSX was running into the operation that we already had in place from Muskegon to Norton Shores," he said. "We probably had a little bit of synergy there."

Bixby said that as a smaller company, Mid-Michigan Railroad may be better suited to help local customers such as Gerber and Sappi.

"I think we're a lot closer to our customers so we can react quicker when they have a change in their business needs or business plan," he said.

Since leasing the new line, Bixby said Mid-Michigan has hired six additional employees and plans to hire two more.

"We look forward to servicing our new customers in that area."    

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